Employing in Japan from Australia

Updated 29 October 2026 · Capital Tokyo · JST (UTC+9), 1 to 2 hours behind Sydney

Employing in Japan

Japan is one of Australia's largest trading partners and sits only 1 to 2 hours behind Sydney. Australian businesses in education, food, resources, technology and tourism often need a local presence to build relationships with Japanese customers.

Japanese employment law makes dismissal difficult. A dismissal is void unless it is objectively reasonable and socially appropriate, so negotiated exits are the norm. Social insurance enrolment and written working conditions are mandatory. An EOR lets you employ locally while you build the relationships that lead to a permanent presence.

Hiring and contracts

Employment contracts

At hiring, employers must give a written notice of working conditions covering wages, hours, workplace and the scope of possible changes. Employers with 10 or more employees must also file their rules of employment with the labour office.

Probation

Probation of 3 to 6 months is typical. It does not remove protection from dismissal, although an employee dismissed within the first 14 days is not owed notice.

Working hours

Ordinary hours are limited to 8 a day and 40 a week. Any overtime depends on a written "36 agreement" between management and staff, and it is generally capped at 45 hours in a month and 360 hours in a year.

Minimum wage

Minimum wages are set prefecture by prefecture. The FY2026 revision adds ¥55 to the national weighted average of ¥1,121 an hour, and each prefecture applies its new rate from its own date starting in October 2026.

Leave and holidays

Annual leave

Employees receive 10 days after 6 months of service, rising to 20 days after 6.5 years. Where staff are entitled to 10 days or more, employers must make sure they take at least 5 each year.

Sick leave

The law provides no paid sick leave. From the fourth day off work, health insurance pays a sickness allowance of roughly two-thirds of pay.

Parental leave

Mothers are entitled to 6 weeks of maternity leave before birth and 8 weeks after. Either parent can then take childcare leave until the child is 1, or 2 if extended, with Employment Insurance paying the benefit instead of the employer.

Public holidays

Japan has 16 national holidays, and employers do not have to make them paid days off.

Employer costs

Retirement and social security

Employees' Pension Insurance is 18.3% of standard monthly remuneration, split evenly between employer and employee. Health insurance, with a rate that depends on the prefecture and insurer, employment insurance and workers' accident insurance are also mandatory.

Payroll taxes

Employers withhold income tax and local resident tax and carry out a year-end tax adjustment for each employee.

Mandatory benefits

Every employee must be enrolled in social and labour insurance and offered an annual health check. Commuting allowances are standard practice, though the law does not require them.

Ending employment

Notice periods

Dismissal requires at least 30 days notice or payment instead.

Dismissal protection

Under the Labour Contract Act, a dismissal is void unless it is objectively reasonable and socially appropriate. Because dismissal is difficult in practice, negotiated exits are common.

Severance

There is no statutory severance, but retirement allowances and negotiated packages are customary.

Contract terms and visas

IP and restraint clauses

Non-competes are enforced only when reasonable in scope, usually with compensation. The Patent Act covers employee inventions and requires reasonable remuneration for them.

Visas and right to work

Foreign professionals typically hold a status of residence such as Engineer/Specialist in Humanities/International Services, which the employer sponsors. A working holiday visa is open to Australians aged 18 to 30.

Compared with Australia

Frequently asked questions